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News Release from: Barclays Group | Subject: Business banking
Edited by the Insidemoneytalk Editorial
Team on 20 March 2008
Business start-ups at highest levels
since Barclays research started 20 years
ago...
...but slowing economy starting to have an impact.
A record 471,500 new businesses opened their doors in 2007, the highest annual volume since Barclays started tracking the market in 1988 despite increasingly difficult trading conditions in the second half of 2007 This is an increase of 17 per cent on the original 1988 figures (403,200), and an increase of three per cent on 2006 (457,200)
This article was originally published on Insidemoneytalk on 24 Dec 2007 at 8.00am (UK)
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Over the last two decades an average 393,000 new businesses have opened their doors for trading each year, which scaled to the working population, translates to an annual 12 starts for every 1000 workers but reached 14 per 1000 in 2007.
The lowest annual volume of starts was recorded in 1992 (280,000) when the economy was experiencing its most severe downturn since 1945.
John Davis, Marketing Director for Barclays Local Business comments: "It is clear that the past 20 years have seen business formation and enterprise become firmly entrenched even if there is the odd hiccup in any given year." "2007 recorded the highest annual volume of business starts partly driven by an ongoing boom in the construction sector.
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Over the last year close to 20 per cent of all starts were construction related demonstrating that Brits obsession with home improvement is far from over.
However, we also must recognise that closures increased markedly during 2007 reaching 498,900, an increase of eight per cent on 2006." "This year expectations are for slower economic growth and a weaker housing market.
This is likely to curtail the buoyancy of start ups.
We do not expect further start-up records in 2008, but we do expect the small business sector to be resilient." Other 20 year highlights: The business stock has reached 2.93 million in 2007, the equivalent of one firm per 8.7 people of working age, an increase of 15 per cent over the last 20 years.
More than seven million businesses have started in the last twenty years whilst a similar number have closed.
The closure rate of the business stock has averaged 14 per cent.
The closure rate was at its peak in the 1991-92 recession, reaching 18 per cent in 1992.
It dropped as low as 11 per cent in 2003 on the back of strong economic performance.
It reached 17 per cent in 2007.
Less than ten per cent of the businesses that started up in quarter one 1988 were still trading at the end of 2007.
2007 Highlights: Start up activity increased in 2007 compared to 2006 in all but one of the English and Welsh regions - Yorkshire (-one per cent) - with particular strong increases in the North East (11 per cent) and West Midlands (11 per cent).
Activity across the eleven broad business sectors was more mixed with five seeing increases in start-ups, five declining and one unchanged.
New firm formation was particularly strong in Construction (20 per cent) and Health, Education and Social Work (19 per cent), although the former may have been boosted by tighter tax treatment of Managed Service Companies.
Production (12 per cent) and Wholesale (-11 per cent) suffered the greatest year on year decline.
Start-up numbers increased across all the age categories of owner-manager, with particularly large increases for those at the extremes.
Volumes increased by nine per cent among the under 25s and 11 per cent for those over 65, albeit from a very low absolute number.
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